Every year, Harvard University’s Joint Center for Housing Studies (JCHS) releases the State of the Nation’s Housing, a report that presents data on the country’s housing market, demographic trends, rental housing, homeownership, and housing challenges. This year’s report, released on June 22, highlights these trends in the context of record-high inflation and soaring rental and home prices. The new report also highlights the growing necessity for housing retrofits among an aging population and the need for improved housing resiliency as climate change continues to threaten the preservation of affordable housing. Read the new report here.
The report highlights record increases in rental prices nationwide. Despite a brief decrease in rents following the onset of the COVID-19 pandemic, rents have more than rebounded, with year-over-year rent growth hitting 11.6% at the end of 2021. According to RealPage data, rents in 116 out of 150 housing markets increased at rates exceeding 10% year-over-year. Rent increases were steepest in southern and western regions of the country, with metros like Naples (FL), Sarasota (FL), Phoenix (AZ), Austin (TX), Las Vegas (NV), Raleigh (NC), and Tucson (AZ) all seeing increases that exceeded 20%.
Recent years have brought increases in rental demand and historically low vacancy rates. Between 2020 and 2022, the number of renter households increased by 1.1 million, or approximately 529,000 households annually. Several factors likely contributed to this increased demand. Government interventions like economic impact payments and student loan deferrals accompanied with rising employment allowed some households to enter the rental market for the first time. At the same time, the particularly tight home buying market may have kept more households renting that otherwise would have bought homes. The heightened demand has resulted in record low vacancy rates, with the national rental vacancy rate falling to 5.6% by the end of 2021 – the lowest rate in nearly 40 years. In the 150 markets tracked by RealPage, 56 had vacancy rates below 2% in the first quarter of 2022.
The report also highlights marked increases in rental housing supply, though these increases have not been enough to keep up with growing demand. In 2021, there were 474,000 starts of multifamily housing units and 60,000 starts of single-family rental units, both of which exceed average annual starts from 2015 to 2019. Despite increasing supply, new rental construction is targeted largely toward high-income households, with the median rent of units completed in 2021 reaching $1,740. Only 15% of units completed in 2021 will rent for less than $1,250. At the same time, growing numbers of higher income renters have entered the market. While the number of renter households making less than $30,000 increased by approximately 650 between 2004 and 2019, the number of households making over $75,000 per year had increased by more than 4,500 households during the same period.
Recent years have also seen a growing share of households with housing cost burdens. The share of cost-burdened homeowners and renter households increased 1 percentage point and 2.6 percentage points, respectively, between 2019 and 2020. Cost-burdens among Black households increased 2.4 percentage points – more than all other racial and ethnic groups. Households making between $30,000 and $45,000 annually also experienced increased housing cost-burdens, with the share of cost-burdened households increasing 4.2 percentage points between 2019 and 2020.
The report concludes with several pressing challenges facing the housing market, including the need to adapt housing for an aging population and the need to improve housing resiliency due to threats from climate change. JCHS projects that the share of the population aged 65 and over will increase from approximately a quarter of the population in 2018 to more than one-third in 2038. Because older householders are much more likely to have difficulties getting around their homes, adapting homes to meet the needs of older adults is critical. Climate change and related natural disasters also threaten the country’s housing stock, with an estimated 14.5 million properties damaged by disasters in 2021 alone.
Read the report at: https://bit.ly/3zVCexL